Whatever you call it, the Federal Reserve has talked a lot lately about what action it may take to prop up the US economy.
That chatter, said Brian Kelly of Kanundrum Capital, may be all the Fed needs to do. By simply talking about monetary policy, the Fed may give investors the confidence they need and watch inflationary expectations rise to somewhere around 2 percent. So by the time their all-important November meeting comes around, they might not need to take any action at all.
If that's the case, the market should sell-off because monetary policy has already been priced in, said Stuart Frankel's Steve Grasso.
That's a risk, answered Kelly, but the Fed is going to be there to inspire confidence in the markets. So he would use any sell off as a buying opportunity.
The traders discussed the possibility of QE2 after Atlanta Fed President Dennis Lockhart said he's leaning in favor of monetary policy, even though it comes with some longer-term risks.
Watch the video to see the full conversation on QE2.
TRADING OIL: SERVICES OR REFINERS?
Haliburton weighed on oil services stocks Monday, as the stock fell after missing on third-quarter earnings.
If the whisper number is expected to be more aggressive, you'll see it transcend through the stock price, noted Grasso. Haliburton was priced to perfection, he said, while Schlumberger is pricing in a miss and Weatherford is expected to beat. He thinks the oil services stocks are "a little pricey" and recommends going with the refiners and Sunoco in particular.
Zachary Karabell of RiverTwice Research still likes Schlumberger and would continue to buy the stock ahead of earnings Friday because it will be the "premier global player in this and not as exposed to land." Grasso said that makes sense if they're already pricing in a miss.
CALL OF THE DAY: UBS UPGRADES AIG
UBS added AIG to its 'short-term buy' list Monday, recommending that investors get in now before the government converts its preferred shares to common shares.
Shortly after making the call, UBS analyst Andrew Kligerman explained his reasoning on "Halftime." He said weeks ago, investors thought AIG was a major sell because no one thought the government would give back any stake in the company. In contrast, they did a preferred to common version and AIG issued warrants. In turn, we get a much more attractive valuation and he doesn't think the investment community has figured that out yet. After evaluating the stock, he set a short-term price target of $45 and a 'short-term buy' rating.
Kligerman thinks the stock will rally once the government issues the warrants. Also, once people work through the valuation, they'll realize it's a strong company worth more than the current share price.